Improvement of Equity Capital and Debt Capital Structure of Smes
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More than 90% of the total number of SMEs in China have been playing an important role, no matter in which type of country. To some extent, the debt paying and financing ability of SMEs will be restricted by whether the capital structure is reasonable or not. Further capital structure also has the ability to determine the future profitability of enterprises, which is one of the fundamental signs of judging the financial situation of enterprises. With the continuous development of market economy in China, the unreasonable capital structure of SMEs restricts the long-term development of enterprises. Many operators ignore the embodiment of capital composition, capital cost and financing efficiency in different industries, only considering the liquidity. It will inevitably bring constraints to the development of enterprises. This paper puts forward the existing problems in the capital structure of SMEs in our country at present, analyzes the reasons and gives the solution, hoping to help the SMEs to optimize the capital structure and provide methodology for creating greater owner equity value.
Capital structure, Equity capital, Debt funds